Objective. Transcranial magnetic stimulation (TMS) is a non-invasive technique widely used for neuromodulation. Animal models are essential for investigating the underlying mechanisms of TMS. However, the lack of miniaturized coils hinders the TMS studies in small animals, since most commercial coils are designed for humans and thus incapable of focal stimulation in small animals. Furthermore, it is difficult to perform electrophysiological recordings at the TMS focal point using conventional coils. Approach. We designed, fabricated, and tested a novel miniaturized TMS coil (4-by-7 mm) that consisted of a C-shaped iron powder core and insulated copper wires (30 turns). The resulting magnetic and electric fields were characterized with experimental measurements and finite element modeling. The efficacy of this coil in neuromodulation was validated with electrophysiological recordings of single-unit activities (SUAs), somatosensory evoked potentials (SSEPs), and motor evoked potentials (MEPs) in rats (n=32) following repetitive TMS (rTMS; 3 min, 10 Hz). Main results. This coil could generate a maximum magnetic field of 460 mT and an electric field of 7.2 V/m in the rat brain according to our simulations. With subthreshold rTMS focally delivered over the sensorimotor cortex, mean firing rates of primary somatosensory and motor cortical neurons significantly increased (154±5% and 160±9% from the baseline level, respectively); MEP and SSEP amplitude significantly increased (136±9%) and decreased (74±4%), respectively. Significance. This miniaturized C-shaped coil enabled focal TMS and simultaneous electrophysiological recording/stimulation at the TMS focal point. It provided a useful tool to investigate the neural responses and underlying mechanisms of TMS in small animal models. Using this paradigm, we for the first time observed distinct modulatory effects on SUAs, SSEPs, and MEPs with the same rTMS protocol in anesthetized rats. These results suggested that multiple neurobiological mechanisms in the sensorimotor pathways were differentially modulated by rTMS.